The market is having a "melt-up?" We just finished the WORST first quarter in the history of the US stock market and the feeling is we are having a melt-up?
Despite assertions of random transactions for a ever-increasing long term Nobel prize winning portfolio, everything from the start of this drop has been historic. In addition to now being the very worst 1st quarter in the history of the stock market it was also the fastest decline of 20% from a stock market peak in history. The level of unemployment in the lastest week was 5 times greater than the second largest increase in unemployment in history. Total unemployment is expected to break the record unemployment of 1933 by 50%. Corporate debt to GDP at the start of this was the highest in the history of the United States. This market is showing moves in a historic, not random, fashion are occurring.
Historic moves cause damage of an historic nature that is not realized until the future exposes what the move was presaging. Jeffries is stating that the FED is going to have to purchase 6 trillion in US Bonds, a truly historic figure, that is not just a random purpose. The Federal Reserve is telling anyone who will listen that they are truly petrified of the potential for economic harm. The government is giving trillions to business, the idea that all the information is well understood and this is just random irrational behavior is an absurdity.
Money was designed as a store of value to facilitate trade of goods. Look around yourself and judge if you think value today is higher than the value was in 2017. By the end of this year GDP will be under what 2017 GDP was and expected growth in GDP at that point was 3.5 percent per year.
Again I urge people to read the only time in history that came close to this current economic environment and read not some Nobel prize winning book but The Great Depression a Diary by Benjamin Roth. Back then it became impossible to collect rental income on properties. How long can the present high rents be sustained across the country with 36% unemployment? What will be the effect on GDP of the lost value in the coming months. In the book Benjamin Roth writes in 1931 than many great bargains abound, only to write in a note in May of 1932 that advice was premature and prices had fallen to 1/3 of the price in 1931. In 1929 the S&P500 fell 12 percent in 1930 it fell 28 percent. By 1931 the S&P500 had fallen to 14 from its high in 1929 of 32. By May of 1932 it would be at 4. A four percent withdrawal from the level of 1929 would have been 30 percent of the value of the portfolio in 1932. Nearly everyone went bust, there was no shortage of smart people back then, it was just a historic move that the populace had not comparison to then.... and so far we are incurring economic damages at 5 times the rate of the stock market crash of 1929.